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Taseko stocks tumble as Fed rejects New Prosperity, BC – again

TORONTO (miningweekly.com) – The Canadian federal government on Wednesday evening for a second time officially rejected Canadian base metals miner Taseko Mines’ C$1.5-billion New Prosperity copper/gold mining project, in British Columbia, saying that it was "likely to cause significant adverse environmental effects that cannot be mitigated".

As a result of the negative outcome, investors sold the company’s TSX-listed stock and it was down by almost 6% on Thursday at C$2.23 apiece.

About four yeas ago, the Ministry rejected the project owing to Taseko intending to drain a lake to use as a tailings pond. Taseko had been pushing the mining project for almost two decades.

"The government of Canada will make decisions based on the best available scientific evidence while balancing economic and environmental considerations. The government will continue to make responsible resource development a priority and invites the submission of another proposal that addresses the government's concerns,” Environment Minister Leona Aglukkaq said in a news release.

The Minister had determined that those effects were not justified in the circumstances; therefore, the project may not proceed.

However, Taseko on Thursday hit back, saying that it fundamentally disagreed with the decision and believed that government’s decision was based on a panel report that contains “serious flaws”.

Aglukkaq confirmed that in reaching its decision, the federal government had considered and agreed with the conclusions of a report released by the independent review panel on October 31.

The independent review panel said that the mine should not be built, as it could threaten water quality in a trout-bearing lake beside the mine site, and impact land and resources used for traditional purposes by local aboriginals.

Following the report's release, Taseko applied to the Federal Court for a judicial review of the assessment, arguing the panel used the wrong information in drawing its conclusions.

The site is 125 km south-west of Williams Lake, and is believed to be the tenth-largest undeveloped gold/copper deposit in the world. The proposed 27 km2 mine would have been constructed in the Fish Creek watershed that includes Fish Lake and Little Fish Lake. The watershed drains into the Taseko river.

The previous New Prosperity development plan was rejected in November 2010.

Taseko president and CEO Russell Hallbauer said that at the invitation of the federal government in 2010, Taseko committed C$300-million to address the concerns from the first panel review and submitted a new proposal. “After a second lengthy and costly federal review, the federal government has once again stood in the way of the development of an important project to British Columbia,” he said.

He underlined that New Prosperity could be built to a high standard of environmental integrity, including the full protection of Fish Lake.

Taseko said that it would proceed with the federal judicial review that started in December. The judicial review challenges certain panel findings and the panel’s failure to comply with principles of procedural fairness.

“Taseko will take the necessary steps to protect this valuable asset, but at the same time, will also look at other opportunities to increase shareholder value,” the company said.

Hallbauer added that the news would be “discouraging” to Cariboo residents and the British Columbia government, which had been a staunch supporter of the project.

In a note to clients, Laurentian Bank Securities metals and mining analyst Christopher Chang said the negative decision by the federal government potentially put Taseko back at the drawing board to re-design a new mine plan for New Prosperity.

"We are not surprised that the Federal Ministry of Environment denied the development plan for New Prosperity as proposed, given the unfavourable recommendation by the federal review panel announced in November 2013.

"While Taseko continues to challenge the report due to the exclusion of a low permeability basin liner, which resulted in significantly higher seepage readings, we believe investors will likely assign a low probability of success to the appeal as the company had already begun direct dialogue with the Federal Ministry of Environment," he said.

British Columbia environmentalist organisation Sierra Club BC welcomed the rejection by the federal Cabinet, saying that this was the only decision that the federal Cabinet could credibly make given the “overwhelming” scientific evidence presented to the review panel and the proven, court-declared First Nations rights to the area.

“For such an obviously destructive project to be considered again and again through three separate processes over nearly a decade, is not a good use of resources that could be devoted to projects that bring community and environmental benefits," executive director Bob Peart said.

New Prosperity has a measured and indicated resource of 5.3-billion pounds of copper and 13.3-million ounces of gold, with an estimated 20-year plus mine life. Taseko expects the project would generate more than C$1-billion in government revenue.

Taseko is the 75%-owner and operator of the Gibraltar mine, the second-largest openpit copper/molybdenum mine in Canada.

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